41

Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

  • Upload
    others

  • View
    3

  • Download
    0

Embed Size (px)

Citation preview

Page 1: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which
Page 2: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Safe Harbor

This presentation contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are subject to the safe harbor protection provided under the securities laws. Methode undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Methode's expectations on a quarterly basis or otherwise. The forward-looking statements in this presentation involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in Methode's filings with the Securities and Exchange Commission, such as our annual and quarterly reports. Such factors may include, without limitation, the following: (1) dependence on a small number of large customers, including one large automotive customer; (2) dependence on the automotive, appliance, computer and communications industries; (3) customary risks related to conducting global operations; (4) timing, quality and cost of new program launches; (5) ability to avoid design or manufacturing defects; (6) ability to compete effectively; (7) dependence on the availability and price of raw materials; (8) dependence on our supply chain; (9) downturns in the automotive industry or the bankruptcy of certain automotive customers; (10) ability to keep pace with rapid technological changes; (11) ability to protect our intellectual property; (12) ability to withstand price pressure; (13) location of a significant amount of cash outside of the U.S.; (14) the recognition of goodwill impairment and long-lived asset charges; (15) currency fluctuations; (16) ability to successfully benefit from acquisitions and divestitures; (17) ability to withstand business interruptions; (18) income tax rate fluctuations; (19) a breach of our information technology systems; and (20) the cost and implementation of SEC disclosure and reporting requirements regarding conflict minerals. 2

Page 3: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which
Page 4: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Solution Groups

4

Automotive59.7%

Other3.2%

Interconnect(User

Interface)27.0%

Power Products10.1%

FY 13 Segment SalesSolutions for• Automotive

• Transportation

• Industrial

• Consumer & Commercial

• Military & Aerospace

• Alternative Energy

• Communications

• Medical

Global Capabilities• Design & engineering

• Program management

• Manufacturing

• Test

Page 5: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Competitive Advantages

5

North America

50%Europe31%

Asia19%

FY13 Sales By Manufacturing Location

• Field-proven technologies provide solutions for our customers and competitive advantage to Methode

• Vertical integration and continuous improvement of manufacturing systems

• Seasoned launch and design teams

• Global manufacturing footprint with regional design and engineering capabilities

Over 290 patents

Successful launch of large programs for General Motors, Ford, Whirlpool and others

Low defective parts per million /High on-time delivery

5

Page 6: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Financial Strength

• FY13 sales grew nearly 12% over FY12

• FY13 non-GAAP EPS of $0.52* (GAAP EPS of $1.08) compared to FY12 EPS of $0.22

• Strong balance sheet with ~ $73.4 million in net cash and credit availability+

• Dividend paid for over 30 years

• Current dividend yield of 1.0%±

• Named one of America’s Most Trustworthy Companies by Forbes in 2012 and 2013

6

+ As of July 27, 2013

± As of November 4, 2013

* Adjusted for the $20.0 million Delphi settlement, $0.3 million Eetrex impairment,$2.1 million Tandem Cash Award expense and $7.6 million increase in the Malta deferred tax asset.

Page 7: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Strong Financial Results

• Sales improved nearly 41%

• Net income grew 250%

• Gross margin improved to 20.3% compared to 18%

• Operating margin improved to 8.9% from 7.3%

• SG&A as a percentage of revenues decreased to 11.3% from 14.5%

• Strong expense leverage

Increased manufacturing efficiencies due to vertical integration

Favorable raw material pricing and product mix in Power Products

Lower than anticipated scrap on General Motors K2xx programs

7

Q1FY14 Versus Prior Year

Page 8: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Improving Margins

8

FY13 Actual FY14 Target FY14 Q1 Actual FY15 Target

Automotive 14.0% High teens% 18.3% Low-mid 20%

Interconnect 26.2% Mid-high 20% 27.2%High 20-low

30%

Power 17.3%* Low 20% 22.5% Mid 20%

Gross Margins

* Includes Eetrex development costs. Without these costs, gross margins would have been 22.0%.

Automotive • Vertical integration of intricate paint

process

• Revenue from GM K2xx

• Methode capacitive touchscreen in FY15

• Europe and Asia already meeting margin goals

Interconnect• Improved mix with greater industrial

revenue

Power • New product launches

• Cost control measures

Page 9: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Improving Margins

9

Pre-Tax Operating Margins

FY11 FY12 FY 13 FY14 Q1

Auto 5.9% 3.7% 5.5% 12.0%

Interconnect 14.4% 14.1% 13.1% 16.9%

Power 7.1% 3.2% 1.6% 13.3%

Consolidated 3.7% 2.5% 4.2% 8.9%

• FY14 goal 9-10% consolidated, reached 8.9% in Q1

• FY15 goal 10-11% consolidated

Page 10: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Automotive Solutions

10

Page 11: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Technological Innovation

11

Electric Vehicle (EV) Bus Bar Assemblies

Integrated CenterConsoles (ICC)

Transmission Products

ICC15.0%Transmission

15.0%

Hidden Switches25.0%

Ergonomic Switches22.0%

SAS8.0%

Other & EV Bus Bars15.0%

FY13 Automotive Sales

Steering Angle Sensors (SAS)

Hidden & Ergonomic Switches

Page 12: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Integrated Center Consoles

• Methode’s integrated center consoles incorporate

Touchscreens, touch panels, ambient lighting

Integrated software allows multiple systems to communicate

• Methode is one of a select, few global suppliers with the technology, manufacturing expertise and ability to design and integrate all functions into a stylistic product that meets stringent automotive requirements

• Major competitors

Alpine

Delphi

Panasonic

12

Preh

TRW

Page 13: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Integrated Center Consoles

13

Major Awards In Production

MyFord & MyLincoln Touch

• 2011-2015 MKX, Edge, & Explorer

• 2013-2017 Taurus, Flex, MKS, & MKT

• Utilize TouchSensor’s Field-Effect and Integrated Back Lighting technologies

• PACE 2012 Award Winner for Field-Effect™ solid-state switches

General Motors K2xx

• 2014-2019 Tahoe, Yukon, Silverado, Sierra, Suburban and Yukon XL

• Standard on every model

• Methode provides entire center console including display, touchscreen and an articulation design on certain platforms

Page 14: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Integrated Center Consoles

• French OEM

Methode’s first high-volume center console program in Europe

Approximately $100m in total revenue over life of program

Approximate revenue of $6m in FY16, ramping to approximately $20m in FY17

Panel integrates display, controls for radio, infotainment and climate functions in a stylish package with innovative decorative finishes

• North American OEM

Approximate revenue of $11m in FY17, ramping to approximately $15m in FY18

Approximately $60m in total revenue over life of program

14

Recent Awards

Page 15: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Transmission Lead Frame

15

• Integrated power and signal distribution backbone for transmission controller

• Highly complex insert molded assembly reduces electrical connections required with traditional design

• Improves system reliability, reduces costs

• General Motors program for 2008-2017 at $48m average annual revenue

• Ford program for 2014-2019 at $9m average annual revenue

GM T76 Lead Frame

Ford 6F35 Lead Frame

Page 16: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

• Laser welding and resistance welding

• Liquid silicone over-molding

• Resin and thermal gel potting

• Aluminium to plastic adhesive

• Launching Q4 FY14 for new Volkswagen hybrid vehicle

16

Transmission Lead Frame

Vertical Integration of New Technologies

LSR CoverLaser 

Welding

LSR Sealing

Aluminum CoverDeep Drawing

Capacitor Capacitor Terminals Resistance Welding

High Strength AdhesiveThermal Curing

Silicone Based PottingThermal Curing

Thermal Adhesive Thermal curing

Page 17: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Transmission Sensor

17

• First deployment of patented Magneto-elastic technology in transmission

• Deployed in new generation of fuel efficient, dual clutch transmissions

• Enables accurate and repeatable measurement

• Resolution nearly ten times current, commercially viable technology

• Withstands harsh environment of transmission

• Operates at temperatures in excess of 360°F

• Launches FY15, 5-year program, $11m average annual revenue

Clutch Plate Position Sensor

Page 18: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

EV Bus Bar Assemblies

18

• Nissan Leaf

North American and European vehicles

Connect lithium-ion battery cells

Each vehicle requires 48 battery modules

Three Methode assemblies utilized on each battery module

Methode developed and implemented an innovative, automated production system meeting stringent automotive requirements

• Working with other OEMs on similar products

Battery Pack With 48 Battery Modules

Page 19: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Interconnect Solutions

19

Page 20: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Technological Innovation

20

Appliance39.0%

Industrial Solutions

27.0%

Data Comm32.0%

Other2.0%

FY13 Interconnect Sales

Appliance User Interface Panels

Industrial Safety Solutions

Data Communication Solutions

Page 21: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Appliance Touch Panels

21

• TouchSensor’s user interfaces are found on over 60% of the solid-state touch interfaces in North America

Integrate touch, LED’s, displays and decorative fascia into one sub-assembly

Discrete key designs as well as high-resolution LCD touchscreens

Main customer brands

Whirlpool

Maytag

Electrolux

Jenn-Air

Jenn-Air Wall Oven

Whirlpool Washer and Dryer

Page 22: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Industrial User Interfaces

22

• Custom engineered control solutions for industrial machinery and equipment

• Pioneering solutions for the next generation of radio remote control systems Touch screens

Load sensors

• Proven expertise with over 300,000 global installations for: Concrete pumps

Cranes

Material handling

Drilling rigs

• Provides Methode a solid path to market to industrial customers

Radio Remote Control Solutions

Live video

Haptic feedback

Locomotives

Work platforms

Explosion proof applications

Page 23: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Data Solutions

23

• Provides products and services focused on supporting the data and telecommunications industries

High speed copper transceivers, loop backs and cages

DCIM enabled cabinet (sensors and centralized data collection)

Fiber optic and copper cable assemblies

Data center cabinets, enclosures and cable management

Intelligent power distribution, assurance and management devices

Design, installations and customization services

Data Center Infrastructure

Page 24: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Power Product Solutions

24

Page 25: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Technological Innovation

25

Power Cabling9.0%

Power Rail9.0%

Bus Bars55.0%

Thermal Mgmt9.0%

Other17.0%

FY13 Power Product Sales

Power Rail

Bus Bars

Interconnect Power Converter Module

System Integration

Thermal Management

Page 26: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Technologies and Capabilities

• Methode is a global expert in design, application and manufacture of power distribution products, thermal components and subassembly solutions in the focus markets of

Big data

Renewable energy

Military/Aerospace

Transportation

• Active Power System Integration

As a tier one integrator, Methode leverages its core capabilities to provide OEMs cost-effective alternatives to managing multiple suppliers

26

Page 27: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

PowerRail

27

• Patented power-distribution provides flexibility with multiple quick connect interconnect points

• Easily customized in lengths, number of rails, connect/disconnect options

• Adds flexibility and redundancy with easy pluggable add-ons, allowing customers systems to operate reliably

• Recent award with “Big Data” customer launched in Q4 FY13

750 Amp Typical Application

200 Amp Showing Connection Density

Page 28: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

What’s Next?

28

Page 29: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Methode’s Core Strategy

Design and engineer productsthat incorporate Methode’s broad rangeof field-proven technologies and utilizeour global manufacturing capabilities

to deliver unique solutionsthat provide genuine value for our customers

and higher margins for our shareholders.

29

Page 30: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Automotive CapacitiveTouchscreens

• Allows functionality, speed and accuracy similar to Smart Phones

• Enhanced user experience compared to resistive technology

• Rigorously tested to automotive standards

• According to IMS Research, 5.8 million automotive touchscreens were sold globally in 2011; sales are expected to rise six-fold to 35.7 million in 2019

• iSupply recently estimated 9 out of 10 vehicles sold in U.S. now offer touchscreens within the center console that almost entirely utilize resistive technology

• Launching in FY15 with major OEM

30

Page 31: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

• One complete system includes

Integrated center stack

Video screen

Capacitive touch screen

• Some vehicles will utilize operator’s cell phone as media server/duplicates phone functionality through vehicle touchscreen

• Advantages

Reduction in discrete modules (housings, regulators, bus transceivers, video interface)

Single source for all HMI functions

Reduces vehicle cabling

• Earliest deployment FY1831

SmartCenter Stack

Increased Integration

Wired/wireless cell phone connection

Audio

Tactile knobs/buttons

Page 32: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

• Patented Magneto-elastic technology relies on magnetizing the drivetrain shaft which, when stressed, outputs an instantaneous and very precise torque measurement

• Allows automakers the ability to measure real-time torque vs. current technology requiring elaborate algorithms that only estimate torque

• Currently being prototyped and tested with several automotive OEMs

• Earliest deployment FY1832

Transmission TorqueMeasurement

Active and Absolute Non-Contacting Torque Sensor

Characteristic Today

Methode’sMagneto-elastic

Technology

Torque calculated by Estimation Measurement

Completely real time No Yes

Accuracy invariant to temperature and altitude

No Yes

Accuracy of initial calibration maintained over time

Sufficient Excellent

Calibration accuracy in cars Very good Excellent

Calibration accuracy in trucks and SUVs

Sufficient Excellent

Smoothness of shift Sufficient Excellent

Page 33: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Digital Printing

• Digital printing on glass

Replaces conventional screen printed decorative tempered glass on user interface panels

Utilizes ultra-violet curable organic inks dispensed via large-scale, digital printer

In production with one customer

Approved by major OEM for conversion in FY14

• Digital printing of graphics and circuits via Methode Nano-particle conductive ink

Replaces conventional printed circuit board

Provides distinct competitive advantage

Reduces inventory, lead-time and tooling (print on demand)

Earliest deployment FY16

33

Page 34: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

HighPer Touch

• Addresses common challenges associated with various touch technologies

• Senses touch through thicker substrate

• Feels the same to user with or without gloves

• Enhanced “noise” performance over conventional touch technology

• Provides water immunity

• Allows for greater variances in manufacturing processes

• Consumer, Automotive, Appliance, Industrial, Medical applications

• Per IHS iSuppli Report, touch controller shipments will reach 2.4 billion pieces by 2015

• Earliest deployment FY15

34

The Next Generation of Touch

Page 35: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

• Transceivers are placed in data communications networks to allow flexibility when connecting switches to other networking equipment

• Copper transceivers are used for short distance high speed communications and are more cost effective than their optical counterparts

• In FY15, Methode will launch 10G copper transceivers with estimated revenue of $40m in FY17

35

10G Transceiver Modules

Page 36: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Therapeutic Support

• Methode medical innovation

New technology aimed at “bed sore” prevention

$2 billion annual concern in U.S.

No longer covered by Medicaid & Medicare if hospital acquired

• Dabir Surfaces Inc.

Licensed IP from Reza Dabir, M.D. (Cardiothoracic Surgeon)

New Methode IP creation (Substantial)

Leverages Methode manufacturing expertise

Utilizes existing Methode technology portfolio

TouchSensor user interface

Encrypted wireless communication

Established channel-to-market36

Page 37: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Therapeutic Support

• Dabir Therapeutic Support Technology

Disposable overlays with intelligent controller

Overlays install between support mattress and cover sheet

Provides alternating “Nodal Support” for localized pressure relief

• Dabir Application Potential

Long-duration surgical procedures

Dialysis procedures

Recovery & long-term care settings

• Commercialization

In negotiation with national distributors, targeting expansion into EU

FDA Device Classification: Class II – 510k exempt

• FY2015 market introduction 37

Page 38: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Methode is…possibilities

38

Page 39: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Investing In Our Future

• Will continue to follow a balanced strategy of investing in our business, maintaining a strong and flexible financial position and returning cash to shareholders

Continue to invest in core businesses to grow, defend and improve our competitive position

Continue to invest in engineering and launch management to provide customer solutions and near-flawless execution

Maintain strong and flexible balance sheet with ample liquidity to support continued growth organically and through acquisitions

• Investing approximately 4-5% of net sales in R&D

• Leverage global footprint, vertical integration and continuous manufacturing systems improvement

39

Page 40: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which

Investment Appeals

• Portfolio of products and solutions to meet customer needs in growing end markets

• Opportunities for expansion into additional end markets

• Global engineering, design and low-cost manufacturing

• Unique patented technologies – strong product development heritage

• Seasoned management team

• Margin expansion through sales growth and expense leverage

• Strong balance sheet with sufficient liquidity to fund growth organically and through acquisition

40

Page 41: Baird presentation 2013 final - Issuer Directedg1.precisionir.com/irwebsites/methode/Bairdpresentation2013final.pdfThis presentation contains certain forward-looking statements, which